research paper on sales promotion

EXPLORING DYNAMIC EFFECT OF SALES PROMOTION ON CONSUMERS: A REVIEW

• Cite This Article as
• Corresponding Author

The recent trend in marketing is customers focused which is intended to fulfill diversified needs, wants and satisfying them. The consumer during purchase evaluates various marketing factors which add value to product either by saving money or providing added benefits. Retailers in this digital era adopt promotional strategies (sales promotion) on routine bases, to persuade and stimulate consumers to buy. Since decades large number of studies has been performed by various authors describing significance of sales promotion. This study elaborates the research conducted in recent years in context with sales promotion techniques and its effectiveness among consumers by reviewing 22 research papers.Sales promotion techniques includes coupons, rebates, price packs, premiums, frequency programs, prizes (contests, sweepstakes, games), patronage awards, free trials, product warranties, point-of-purchase (P-O-P) displays and demonstrations etc, which produce quick results as it boosts sales quickly and make customer loyal in long run. It was evident from past researches review that sales promotion had positive and significant influence on consumers towards purchasing similar or differential products of varying quantities from diversified segments of market. Thus, marketer by selecting combination of sales promotion techniques can exaggerating sales and generate profit. 

• Retailer and Sales Promotion

[ Neha Soni and G.K. Deshmukh (2023); EXPLORING DYNAMIC EFFECT OF SALES PROMOTION ON CONSUMERS: A REVIEW Int. J. of Adv. Res. 11 (Feb). 261-270] (ISSN 2320-5407). www.journalijar.com

Article DOI: 10.21474/IJAR01/16248       DOI URL: http://dx.doi.org/10.21474/IJAR01/16248

Download Full Paper

Share this article.

How to Promote Sales: Discount Promotion or Coupon Promotion?

• Published: 03 July 2020
• Volume 29 , pages 381–399, ( 2020 )

Cite this article

• Peng Wang 1 ,
• Rong Du 1 &
• Qiying Hu 2  

695 Accesses

6 Citations

Explore all metrics

In this paper, we examine how a merchant should choose between discount promotion (offering a discount through an online third-party promotion platform) and coupon promotion (issuing on-package coupons directly to consumers). We develop a two-period model in which the merchant optimizes the promotion decision in the first period and does not promote in the second period. We identify two consumer segments: informed consumers who are aware of the merchant’s offering at the beginning of the first period and know the true quality of the product, and uninformed consumers who are not aware of the merchant’s offering at the beginning of the first period and underestimate the product quality. Moreover, the merchant has access only to informed consumers when adopting coupon promotion or when choosing not to promote, while the merchant can access both informed consumers and uninformed consumers when offering discount promotion. In this setting, we find that the merchant should offer discount promotion when the quality estimation of uninformed consumers is large and/or when the proportion of informed consumers is small; otherwise, the merchant should adopt coupon promotion when the effect of coupons in the first period is large and choose not to promote when the effect of coupons in the first period is small.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price includes VAT (Russian Federation)

Instant access to the full article PDF.

Rent this article via DeepDyve

Institutional subscriptions

Similar content being viewed by others

Buying free rewards: the impact of a points-plus-cash promotion on purchase and reward redemption

Scanning for discounts: examining the redemption of competing mobile coupons

How Does the Extended Promotion Period Improve Supply Chain Efficiency? Evidence from China’s Online Shopping Festival

Cabral L, Li LF (2015). A dollar for your thoughts: Feedback-conditional rebates on eBay. Management Science 61(9): 2052–2063.

Google Scholar  

Cao Z, Hui KL, Xu H (2018). When discounts hurt sales: The case of daily-deal markets. Information Systems Research 29(3): 567–591.

Chandon P, Wansink B, Laurent G (2000). A benefit congruency framework of sales promotion effectiveness. Journal of Marketing 64(4): 65–81.

Chen Y, Moorthy S, Zhang Z J (2005). Price discrimination after the purchase:Rebates as state-dependent discounts. Management Science 51(7): 1131–1140.

Cohen M C, Leung N H Z, Panchamgam K, Perakis G, Smith A (2017). The impact of linear optimization on promotion planning. Operations Research 65(2): 446–468.

MathSciNet   MATH   Google Scholar  

Demiragabb O C (2011). Customer rebates and retailer incentives in the presence of competition and price discrimination. European Journal of Operational Research 215(1): 268–280.

MATH   Google Scholar  

Dhar S K, Morrison D G, Raju J S (1996). The effect of package coupons on brand choice: An epilogue on profits. Marketing Science 14(2): 192–203.

Edelman B, Jaffe S, Kominers S D (2016). To groupon or not to groupon: The profitability of deep discounts. Marketing Letters 27(1): 39–53.

Gao F, Chen J (2015). The role of discount vouchers in market with customer valuation uncertainty. Production and Operations Management 24(4): 665–679.

Ha A, Shang W, Wang Y (2017). Manufacturer rebate competition in a supply chain with a common retailer. Production and Operations Management Advance online publication. Doi: https://doi.org/10.1111/poms.12749 .

Hu S, Hu X, Ye Q (2017). Optimal rebate strategies under dynamic pricing. Operations Research Advance online publication. Doi: https://doi.org/10.1287/opre.2017.1642 .

Inman J J, Mcalister L (1994). Do coupon expiration dates affect consumer behavior? Journal of Marketing Research 31(3): 423–428.

Jain D, Mahajan V, Muller E (1995). An approach for determining optimal product sampling for the diffusion of a new product. Journal of Product Innovation Management 12(2): 124–135.

Kotler P, Keller K (2016). Marketing Management . China Renmin University Press.

Kwark Y, Chen J, Raghunathan S (2014). Online product reviews: Implications for retailers and competing manufacturers. Information Systems Research 25(1): 93–110.

Lu Q, Moorthy S (2007). Coupons versus rebates. Marketing Science 26(1): 67–82.

Martín-Herrán Guiomar, Sigué Simon-Pierre (2015). Trade deals and/or on-package coupons. European Journal of Operational Research 241(2): 541–554.

Ma S, Fildes R (2017). A retail store SKU promotions optimization model for category multi-period profit maximization. European Journal of Operational Research 260: 680–692.

Shapiro C (1983). Optimal pricing of experience goods. The Bell Journal of Economics 497–507.

Shivendu S, Zhang Z (2014). Economics of daily-deal business models. Theory in Economics of Information Systems (TEIS).

Soman D (1998). The illusion of delayed incentives: Evaluating future effort-money transactions. Journal of Marketing Research 35(4): 427–437.

Subramanian U, Rao RC (2016). Leveraging experienced consumers to attract new consumers: An equilibrium analysis of displaying deal sales by daily deal websites. Management Science 62(12): 3555–3575.

Xia Y (2016). Responding to supplier temporary price discounts in a supply chain through ordering and pricing decisions. International Journal of Production Research 54(7): 1938–1950.

Yang S, Munson C L, Chen B, Shi C (2015). Coordinating contracts for supply chains that market with mail-in rebates and retailer promotions. Journal of the Operational Research Society 66(12): 2025–2036.

Zhang J, Li J, Lu L, Dai R (2017). Supply chain performance for deteriorating items with cooperative advertising. Journal of Systems Science and Systems Engineering 26(1): 23–49.

Zhang Z, Shivendu S, Wang P (2019). Is investment in data analytics always profitable? The case of third-party-online-promotion marketplace. Available at SSRN: https://ssrn.com/abstract=3486495 .

Download references

Acknowledgments

We are grateful to the anonymous referees for their insightful and constructive comments and suggestions, which have helped us tremendously improve this paper. Thanks to the editor of this journal for the positive feedback. We also thank Professor Zhe Zhang from the University of Texas at Dallas for his comment. This research was supported by the National Natural Science Foundation of China under Grant No. 71771184 and partially supported by the Key Project of Shaanxi International Science and Technology Cooperation through Grant No. 2018KWZ-04. Qiying Hu also acknowledges financial support from the National Science Foundation of China(NSFC) under Grant No. 71671046.

Author information

Authors and affiliations.

School of Economics and Management, Xidian University, Xi’an, 710126, China

Peng Wang & Rong Du

School of Management, Fudan University, Shanghai, 200433, China

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Peng Wang .

Additional information

Peng Wang is a PhD student at Xidian University, Xi’an, Shaanxi. He got his bachelor’s degree in management from Xidian University. He was a visiting scholar in The University of Texas at Dallas, USA. His general research interests are in e-commerce, economics of information systems, platform economy, and online promotion. His papers have been published in academic journals and conferences, including Journal of Systems Science and Systems Engineering and INFORMS Annual Meeting.

Rong Du is the Huashan Scholar-Chair Professor of Management Science and Engineering at the School of Economics and Management, Xidian University, China. She got her bachelor’s degree in information control engineering and master’s degree in technological economics from Xi’an Jiaotong University, and a PhD degree in applied mathematics from Xidian University, China. She did her postdoctoral research in the Department of Management Information Systems at the University College Dublin, Ireland. She was a visiting professor in Georgia State University, USA. Her research interests include knowledge management, information systems, and E-commerce. She has published papers in journals such as European Journal of Operational Research, Expert Systems with Applications, Journal of Strategic Information Systems, International Journal of Information Technology & Decision Making, Electronic Commerce Research, etc. Dr. Du is a scholar of the New Century’s Excellent Talent Supporting Program selected by the Ministry of Education in China.

Qiying Hu is a professor with the Department of Management Science, School of Management, Fudan University. He received his B.S. degree in mathematics from Hangzhou University, China, M.S. in applied mathematics from Xidian University, China, and PhD in systems engineering from Konan University, Japan. His research interests include supply chain management, business model, and service management. He has been the author or coauthor over 150 research papers published in journals such as Production and Operations Management, Naval Research & Logistics, European Journal of Operations Research, and International Journal of Production Economics; and the author or coauthor over 15 books.

Rights and permissions

Reprints and permissions

About this article

Wang, P., Du, R. & Hu, Q. How to Promote Sales: Discount Promotion or Coupon Promotion?. J. Syst. Sci. Syst. Eng. 29 , 381–399 (2020). https://doi.org/10.1007/s11518-020-5457-1

Download citation

Published : 03 July 2020

Issue Date : August 2020

DOI : https://doi.org/10.1007/s11518-020-5457-1

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Sales promotions
• on-package coupons
• coupon promotion
• discount promotion
• delayed incentive
• Find a journal
• Publish with us
• Track your research

Sales Promotion: Definition and Examples

Discover effective sales promotion strategies, definitions and examples to boost sales and enhance brand loyalty in our detailed guide.

Salesforce Staff

Share article.

Sales promotion is a marketing strategy that businesses use to boost sales, create brand awareness, and drive customer loyalty. It involves various techniques and tactics to incentivise customers to make a purchase or take a specific action. In this article, we will delve into the world of sales promotions, exploring its definition, uncovering its benefits and drawbacks, and examining different types of sales promotions. We’ll also provide insights on how to effectively plan, execute, and measure your sales promotions, and how Salesforce can assist you in optimising your sales promotion efforts.

What is sales promotion?

Sales promotion is a marketing strategy designed to increase the sales of a product or service. It involves various techniques and tactics to incentivise customers to make a purchase or take a specific action. Unlike advertising, which focuses on creating awareness and building brand recognition, sales promotion is more action-oriented and aims to drive immediate results.

Sales promotions can be used for a variety of purposes, including:

Introducing a new product or service: Sales promotions can help create excitement and generate buzz around a new offering, encouraging potential customers to try it out.

Increasing brand awareness: Sales promotions can help increase visibility and recognition of a brand, especially when they involve unique or creative offers.

Generating leads: Sales promotions can be used to capture contact information from potential customers, providing businesses with valuable leads for future marketing and sales efforts.

Benefits of sales promotions

Sales promotions can be used to achieve a number of benefits, including increasing brand awareness, generating leads, boosting sales and revenue, building customer loyalty and repeat business, and clearing out old stock or inventory.

Increasing Brand Awareness

Sales promotions can help to increase brand awareness by introducing new products or services to potential customers. They can also remind existing customers of your brand and encourage them to make repeat purchases. By offering discounts, free samples, or other incentives, sales promotions can attract new customers and get them to try your products or services. This can lead to increased brand recognition and loyalty.

Generating Leads

Sales promotions can also be used to generate leads for your business. By offering a free consultation, a white paper, or other valuable content, you can capture the contact information of potential customers who are interested in your products or services. This information can then be used to follow up with these customers and nurture them into becoming paying customers.

Boosting Sales and Revenue

Sales promotions can also be used to boost sales and revenue. By offering discounts, rebates, or other incentives, you can encourage customers to make purchases that they might not have otherwise made. This can lead to increased sales and revenue for your business.

Building Customer Loyalty and Repeat Business

Sales promotions can also be used to build customer loyalty and repeat business. By rewarding customers for their purchases, you can show them that you appreciate their business and encourage them to continue to buy from you. This can lead to increased customer loyalty and repeat business, which can help you to grow your business over the long term.

Clearing Out Old Stock or Inventory

Finally, sales promotions can also be used to clear out old stock or inventory. By offering discounts or other incentives, you can encourage customers to purchase products that are not selling well. This can help you to free up space in your warehouse and make room for new products.

Drawbacks of sales promotions

Sales promotions, while effective, are not without their drawbacks. One potential downside is the risk of cannibalising sales from other channels. For instance, if a product is heavily discounted during a sales promotion, customers may be more inclined to purchase it during the promotion rather than at its regular price. This can lead to a decrease in sales at full price, offsetting the gains from the sales promotion.

Another challenge lies in accurately measuring the effectiveness of sales promotions. While some promotions may result in an immediate boost in sales, it can be difficult to determine the long-term impact on customer behaviour and brand loyalty. Additionally, tracking the ROI of sales promotions can be complex, as it involves considering various factors such as the cost of the promotion, changes in sales volume, and customer acquisition and retention rates.

Furthermore, sales promotions can potentially trigger price wars among competitors. When one business offers a significant discount or promotion, other businesses in the same industry may feel compelled to follow suit to maintain their market share. This can lead to a race to the bottom, with businesses continually slashing prices to outdo each other, ultimately eroding profit margins for all involved.

Finally, if not executed properly, sales promotions can damage a brand’s image. Offering excessive discounts or promotions too frequently can cheapen the brand’s perception in the eyes of consumers. This can make it challenging to restore the brand’s value proposition and premium pricing once the promotion ends.

To mitigate these drawbacks, businesses should carefully consider the objectives, target audience, and potential impact of sales promotions before implementation. Balancing the benefits and risks, setting clear goals, and continuously monitoring and evaluating the results are crucial to ensuring the success of sales promotions while minimising any negative consequences.

10 types of sales promotions

There are many different types of sales promotions that businesses can use to increase sales. Some of the most common include:

• Price discounts: Price discounts are one of the most common types of sales promotions. They involve offering a product or service at a reduced price for a limited time. Price discounts can be effective in generating leads, increasing brand awareness, and clearing out old stock.
•   Loyalty programs: Loyalty programs are another popular type of sales promotion. They involve rewarding customers for their repeat business. Loyalty programs can help to build customer loyalty and repeat business, and they can also be used to collect valuable customer data.
• Free samples: Free samples are a great way to introduce new products or services to potential customers. They can also be used to generate leads and build brand awareness.
• Buy-one-get-one (BOGO) offers: BOGO offers are a type of sales promotion that involves offering two products or services for the price of one. They can be effective in generating leads, increasing brand awareness, and clearing out old stock.
• Rebates: Rebates are a type of sales promotion that involves offering a refund to customers who purchase a product or service. Rebates can be effective in generating leads, increasing brand awareness, and clearing out old stock.
• Contests: Contests are a fun and engaging way to generate leads, increase brand awareness, and build customer loyalty. Contests can be held online, in-store, or through social media.
• Referral programs: Referral programs are a type of sales promotion that involves rewarding customers for referring new customers to a business. Referral programs can be effective in generating leads and building customer loyalty.
• Flash sales: Flash sales are a type of sales promotion that involves offering a product or service at a deep discount for a very limited time. Flash sales can be effective in generating leads, increasing brand awareness, and clearing out old stock.
• Social media promotions: Social media promotions are a type of sales promotion that involves using social media platforms to promote a product or service. Social media promotions can be effective in generating leads, increasing brand awareness, and building customer loyalty.
• Email marketing promotions: Email marketing promotions are a type of sales promotion that involves using email to promote a product or service. Email marketing promotions can be effective in generating leads, increasing brand awareness, and building customer loyalty.

How to prepare your sales force for a sales promotion

To ensure the success of a sales promotion, it is crucial to adequately prepare the sales force. This involves setting clear and achievable objectives for the promotion. These objectives should be specific, measurable, achievable, relevant, and time-bound. For instance, a sales promotion objective could be to increase sales of a particular product by 15% within a two-week period.

Providing comprehensive training is also essential to equip the sales team with the knowledge and skills necessary to execute the sales promotion effectively. This training should cover product knowledge, sales techniques, and communication skills. Role-playing exercises and simulations can be incorporated into the training to enhance the sales team’s preparedness.

Furthermore, it is important to ensure that the sales team has the necessary resources to support the sales promotion. This may include marketing materials, such as brochures, flyers, and social media graphics. Additionally, the sales team should have access to customer relationship management (CRM) systems and other relevant technology to facilitate their tasks.

Motivating the sales team is crucial to driving their performance during a sales promotion. This can be achieved through various incentives and rewards, such as commissions, bonuses, and non-monetary recognition. Setting up friendly competitions among the sales team can also foster a sense of healthy competition and motivation.

By following these steps and ensuring that the sales force is well-prepared, businesses can increase the likelihood of a successful sales promotion. A well-prepared sales team is more likely to effectively communicate the value of the promotion to customers, drive sales, and achieve the desired objectives.

Where to hold your sales promotion

When choosing a location for your sales promotion, there are several key factors to consider to ensure its success. The first is the location of your target market. Your sales promotion should be held in a place that is easily accessible to your target audience. If your target market is local, consider holding the promotion in a central location within your community. If your target market is broader, you may want to consider holding the promotion in a larger city or region.

The size of your sales promotion is also an important factor to consider when choosing a location. If you are expecting a large number of attendees, you will need to find a location that can accommodate the crowd. This could include a convention centre, a large retail store, or an outdoor space. If you are expecting a smaller number of attendees, you may be able to get by with a smaller location, such as a conference room or a restaurant.

The cost of the location is another important factor to consider. Some locations may be more expensive than others, so it is important to set a budget before you start your search. Be sure to factor in the cost of renting the space, as well as any additional costs, such as parking, catering, and security.

The accessibility of the location is also important. Make sure that the location is easy to get to, both by car and public transportation. If possible, choose a location that is close to major highways or public transportation hubs.

Finally, consider the atmosphere of the location. The atmosphere should be conducive to the type of sales promotion you are holding. For example, if you are holding a product launch, you may want to choose a location that is modern and stylish. If you are holding a customer appreciation event, you may want to choose a location that is more relaxed and informal.

How to make sales promotion effective

To make sales promotion effective, it is crucial to follow a strategic approach. Here are some key steps to ensure the success of your sales promotion:

1. Define Your Target Audience:

Clearly identify your target audience and tailor the sales promotion specifically to their needs, preferences, and buying behaviour. Understand their pain points, interests, and motivations to create a promotion that resonates with them. By targeting the right audience, you increase the chances of your sales promotion being successful.

2. Set Clear and Achievable Goals:

Define specific, measurable, achievable, relevant, and time-bound (SMART) goals for your sales promotion. Determine what you aim to achieve, whether it’s increasing brand awareness, generating leads, boosting sales, or building customer loyalty. Having clear goals helps you measure the success of your promotion and make necessary adjustments.

3. Choose the Right Sales Promotion Type:

Select the most appropriate sales promotion type based on your product or service, target audience, and business objectives. There are various options available, such as discounts, loyalty programs, free samples, BOGO offers, rebates, and contests. Choose the promotion type that aligns best with your goals and resonates with your target market.

4. Promote Your Sales Promotion Effectively:

Once you’ve chosen the right sales promotion type, effectively communicate it to your target audience. Utilise multiple channels to promote your sales promotion, including social media, email marketing, website, in-store signage, and paid advertising. Create a sense of urgency and excitement to encourage customers to take advantage of the promotion.

5. Track and Measure Results:

Continuously monitor and measure the results of your sales promotion to assess its effectiveness. Use key performance indicators (KPIs) such as sales volume, website traffic, lead generation, customer engagement, and conversion rates to evaluate the success of the promotion. Analyse the data to identify what worked well and what needs improvement for future promotions.

How Salesforce can help with sales promotion

Salesforce is a powerful customer relationship management (CRM) platform that can help businesses with sales promotion in various ways. It offers a range of tools and features designed to streamline and enhance sales promotion campaigns.

Salesforce enables businesses to track and manage sales promotion campaigns effectively. With its robust reporting and analytics capabilities, businesses can gain valuable insights into the performance of their sales promotions, including metrics such as campaign reach, engagement rates, conversion rates, and revenue generated. This data-driven approach allows businesses to make informed decisions and optimise their sales promotion strategies for better results.

Salesforce also facilitates the creation of personalised sales promotions for customers. By leveraging customer data and preferences stored in the CRM, businesses can tailor their sales promotions to meet the specific needs and interests of individual customers. This personalised approach enhances customer engagement and increases the likelihood of conversions.

Salesforce streamlines sales promotion processes through automation. The platform allows businesses to automate tasks such as sending promotional emails, generating coupons, and tracking customer interactions. This automation saves time and resources for sales teams, enabling them to focus on building relationships and closing deals.

Salesforce enables businesses to measure the success of their sales promotions accurately. With its advanced analytics tools, businesses can track key performance indicators (KPIs) such as sales volume, revenue, customer acquisition, and customer retention. This data helps businesses evaluate the effectiveness of their sales promotions and make necessary adjustments to improve future campaigns.

Additionally, Salesforce integrates seamlessly with other marketing and sales channels, providing a unified platform for managing sales promotions. Businesses can connect Salesforce with their website, social media platforms, email marketing tools, and point-of-sale systems to create a cohesive sales promotion experience for customers. This integration ensures consistency in messaging and enhances the overall customer experience.

In summary, Salesforce offers a comprehensive suite of tools and features that empower businesses to execute successful sales promotion campaigns. By leveraging Salesforce, businesses can track and manage campaigns effectively, create personalised promotions, automate processes, measure success, and integrate sales promotions with other marketing and sales channels.

Just For You

Competitor Analysis: What is it, and how do you conduct one?

What is Performance Analytics?

Explore related content by topic

• Sales Cloud

The 360 Blog from Salesforce teaches readers how to improve work outcomes and professional relationships. Our content explores the mindset shifts, organisational hurdles, and people behind business evolution. We also cover the tactics, ethics, products, and thought leadership that make growth a meaningful and positive experience.

Want Trailblazer tips and thought leadership straight to your inbox?

Sales Data: How to Perform a Sales Data Analysis

Continue Your AI and CRM Journey After World Tour Essentials Singapore

Demand Forecasting: A Complete Guide

What Is Sales? Meaning, Types, and How to Succeed

What are conversion rates?

What Is a Sales Pipeline and How Do You Build One? A Complete Guide

Your Sales Tech Stack Is About to Get a Whole Lot Smaller

Predictive analytics: shaping the future with salesforce.

New to Salesforce?

• Why Salesforce
• What is CRM
• Explore All Products
• Customer Success
• Product Pricing

About Salesforce

• Security and Performance
• Salesforce.org
• Best CRM Software
• Sustainability
• Give us your Feedback

Popular Links

• New Release Features
• Salesforce Mobile App
• Business App Store
• CRM Software
• Salesforce Plus
• Salesforce for Startups
• América Latina (Español)
• Brasil (Português)
• Canada (English)
• Canada (Français)
• United States (English)

Europe, Middle East, and Africa

• España (Español)
• Deutschland (Deutsch)
• France (Français)
• Italia (Italiano)
• Nederland (Nederlands)
• Sverige (Svenska)
• United Kingdom (English)
• All other countries (English)

Asia Pacific

• Australia (English)
• India (English)
• Malaysia (English)
• ประเทศไทย (ไทย)

© Copyright 2024 Salesforce, Inc. All rights reserved . Various trademarks held by their respective owners. Salesforce.com Singapore Pte Ltd. 5 Temasek Boulevard #13-01 Suntec Tower 5 Singapore 038985